Documente Academic
Documente Profesional
Documente Cultură
1. Definitions
2. Judging Economic Allocations
3. Econ as a science
Reading: Ch 1 & Ch 2
Definitions:
Economics: the study of the choices people make and the actions they take in order to make
the best use of scarce resources in meeting their wants and needs
Economic Choices: consider the activity X, if the benefits of X > costs, then you should do X. If
the costs of X > benefits of X then you likely shouldn’t do X
ex. Activity X: a policy that reduces the speed limit on the highway between YEG & YYC
to 10km/h
Costs: change signs, time, enforcement, emissions, shipping & travelling costs
Benefits: less deaths
Thinking at the Margin: for activity X, if the marginal benefits of X > marginal costs of X then
you should do X
ex. You are taking 5 classes but are considering taking a 6th. Instead of analyzing the
costs/benefits of taking 6 classes as a whole, you would just analyze the cost/benefits of taking
the extra class
Judging economic allocations: allocation of resources can be evaluated on the basis of;
1. Efficiency: Allocative efficiency is present when society's resources are so organized
that the present value of net benefits are maximized
2. Equity: distributing goods & services in a manner considered by society to be fair
3. Moral/political consequences